![]() In Luminar's case, it will have access to $400 million Gores raised and an additional $170 million from a group of investors that includes Peter Thiel, Volvo Cars Tech Fund, and VectoIQ, the SPAC that bought Nikola. With a reverse merger, the private company only has to negotiate a sale price with the SPAC, though institutional investors may also pitch in. "We probably wouldn't do a normal IPO during this time, but given that you have with the SPAC structure even greater certainty around value," and the amount of capital you'll raise, "it definitely became a very attractive option," he said.īefore a traditional IPO, a company has to pitch itself to a variety of institutional investors and, with the help of an investment bank, decide on a share price that will make it and its investors happy. Once the purchase is complete, the SPAC merges with the company it bought, and investors who bought the SPAC's stock become shareholders of the new company.įor Luminar - best known for making lidar sensors, which emit pulses of light to detect the objects surrounding a vehicle - going public through a reverse merger was more appealing than a traditional IPO because it offered more certainty around the amount of money it would be able to raise and the valuation it would receive, CEO Austin Russell told Business Insider. Gores is a special purpose acquisition company, or SPAC, a firm that raises money and goes public with the sole intention of buying another company instead of making its own products or services. ![]() On August 24, the lidar startup Luminar followed rival Velodyne and electric-vehicle makers Nikola, Fisker, and Canoo by announcing its plan to merge with Gores Metropoulos. Reverse mergers have replaced traditional IPOs this year as the preferred method for auto industry players to go public.
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